Average Family Wages Top $40,000

Income Up, But Not All Feeling Flush

On the surface, Sauda Smith does not fit the profile of someone left out of the current economic feast.

After all, the 28-year-old has a master's degree in education and has been bringing home a steady paycheck as a teacher for six years. By this time, she thought she'd be living more comfortably. But, in truth, she is never more than a cracked radiator or a root canal away from financial disaster.

"God has really helped me out with the car," said Smith, who drives a 1991 Geo Prizm with almost 130,000 miles on the odometer. She has been less lucky with her teeth, having just been told that she'll need major dental work. "It will just have to wait. ... Any unexpected expenses can really ruin the budget, so you just learn to do without."

Smith earns $36,000 a year as a teacher at Yates School in Matteson, which she buttresses with another $4,200 or so from her fledgling business making gift baskets. The total brings her close to the U.S. median household income of $40,816--a record high, according to Census Bureau data released Tuesday. And the picture was even rosier in the Midwest, where median household income rose to $42,679 in 1999.

It was the fifth year in a row that Americans saw a surge in pre-tax income--the longest economic expansion in U.S. history--but people like Smith, a single mother, hardly see reason to celebrate.

Like many, she is finding that "median" doesn't seem like much.

On the expense side, Smith has a $30,000 college loan and parochial school tuition, as well as afternoon day care for 4-year-old Jasmine. Only by making every quarter act like a dollar (she clips coupons and buys groceries in bulk) and living with her parents (she pays them $500 a month for rent) can she make ends meet.

"I really feel as if I'm making a difference in education. ... and making gift baskets is certainly not a legacy, but it's what I have to do to take care of my daughter."

The degree to which people at these income levels feel flush depends entirely on a household's circumstances. For a younger couple starting out or a retired couple whose mortgage is paid off, the median represents a decent income, said Jim Platania, a financial planner in Mt. Prospect.

"But for a couple with kids in school, that's tough," he said.

An income of $42,000 for a family of four translates to take-home pay of about $2,800 a month, he noted. If the family has rent or a mortgage of $1,000, that leaves $1,800 for everything else.

"Car payments can be $300 to $700 a month," he said. "Then there's groceries and education costs if the kids are in parochial school, or God forbid, college."

This time last year, Rhonda Goebel and her partner had a combined income of $60,000, and last December, they bought a 1918 bungalow in Oak Park that they knew needed some fixing up.

Since then, her partner lost her social services job, and the couple and their 12-year-old son are living on about $41,000 a year. Now Goebel, 35, assistant director at Parenthesis, an Oak Park social service agency, expects to lose her job in a restructuring.

"I feel like we're constantly struggling," said Goebel, a former teacher. "We're not able to save, and we have a list of expenses, especially things that need to be done to the house, that we don't have the money to pay for."

The couple has only $1,000 in the bank as savings, and no medical coverage, so if any unexpected major expenses crop up, "we'd really be in big trouble," she said.

"It's just amazing," she said. "We're well-educated and have lots of experience, but we're still struggling."

A change in circumstances also shrunk the bottom line for Beverly Brice. Before her divorce three years ago, she and her husband would bring in a joint income of $70,000.

But now the 36-year-old Palos Hills woman struggles to make ends meet with an annual salary of about $35,000 and the $400 a month she receives in child support. Her family's income may come in at just a thousand dollars under the median income level, but with high gas costs and child-care expenses, it just doesn't stretch far enough.

After the divorce, Brice moved out of her south suburban home and into a two-bedroom apartment. Now, she pays the bulk of the child care costs. Day care for her 8-month-old runs $188 a week--or $9,000 annually. Before and after-school care for her 10-year-old takes another $4,000 yearly chunk of pay.

Subtract $700 for rent and $211 for a car loan each month, plus groceries, savings and a 401(k), and it's easy to see how she ends up with too much month at the end of the money.

"It's a struggle because you're living from check to check," said Brice, who works in human resources at South Shore Bank. "Sometimes, you feel that no matter how much you're bringing home, the expenses always go up."